Company Behind $99 Console Looks to Develop New Videogames

Ouya Inc. said Thursday it will launch a $1 million Kickstarter campaign in August, hoping to spur rapid development of games for its newly launched console.

Julie Uhrman, CEO of the San Mateo, Calif.-based company, said Ouya was returning to the crowd-sourced online funding platform to mark the one-year anniversary of its own capital-raising effort, which garnered nearly $8.6 million to pay for design and production of the console. That eclipsed the $950,000 the company had initially intended to raise, making it one of Kickstarter’s most-successful campaigns.

This time, though, Ouya will be giving. Starting Aug. 9, developers who pledge between $50,000 and $250,000 to build their games will receive matching funds. The Ouya funding will continue until the $1 million is spent or Aug. 10, 2014, whichever comes first. At the campaign’s close, Ouya will also offer the highest pledger an additional bonus.

“The kicker, at the end, is whichever raises the best will get a $100,000 bonus,” Uhrman said. “We’re saying, ‘hey, you’re a rock star.’ ”

Developers who take Ouya’s money will have to make their games exclusive on the console for at least six months. How many developers will build games for the Ouya remains to be seen, but there appears to be a lot of curiosity about the console, with well over 10,000 people having downloaded the developer’s kit.

Ouya’s product, a brushed-grey-and-black gaming cube slightly bigger than a coffee mug, lets users play games on their television sets. Ouya brought in designer Yves Behar to collaborate on the console’s design, which features a single on/off button on one cube face and four input/output ports on another. The box runs on a version of Android. The console ships with a single controller, though others can be purchased, and can be paired with Xbox 360 and PlayStation 3 controllers for single or multiplayer games.

Shipped earlier to those who had pledged money over Kickstarter, the Ouya console went on sale to the general public at $99 on June 25, a red plastic film sheet in each box boldly proclaiming, “and so begins the revolution.”

With other TV-gaming consoles from NintendoSony and Microsoft running between $200 and $500, the Ouya’s $99 price tag is somewhat revolutionary. Nintendo launched its next-generation Wii U console late last year. Sony and Microsoft will refresh their respective Playstation and Xbox consoles later this year with new, souped-up versions.

But it’s the way the Ouya’s gaming ecosystem is being imagined and encouraged by the start-up company that is somewhat more revolutionary. Demands and strictures on developers to build for specific platforms have increased. Competition among them is fierce, margins are low and costs have spiraled in recent years, with consumers seeking ever-better graphics and gameplay. Some games feature high-definition cinematic scenes and orchestral soundtracks with music composed specifically for the single game.

All that has led to the generally accepted price of game discs to around $60. Ouya is taking a different tack, and it doesn’t have any discs, with all games downloadable from an online shop at far lower prices, after an initial free demo.

“We sought out to do two things. What was on mobile and the Web, we wanted to bring to TV. All games are free to try. It’s in the power of the developers to build the games the way they want. There are no rules, but that the games are free to try,” said Uhrman. “There are a lot of different monetization programs on Ouya.”

A game like Sonic the Hedgehog on the Ouya allow players to advance to Level 3 before they’re asked to pay $6.99 for the full game. Other games offer a small, limited free demo or are completely free to play, but require the user to pay real money to buy virtual items that improve the game experience, like weapons or potions. Some popular games on the Ouya, like Towerfall, cost $14.99.

The pricing of games in the Ouya shop is also interesting. Unlike the world of Apple’s iOS, where consumers are used to and willing to pay fairly sizable amounts for downloaded apps, the Android app markets feature many completely free or very low-priced apps.

If Ouya’s “free-to-play, then buy” store model succeeds, it could well be a game-changer for Android app developers. Redesignating an app as a game and porting it onto the new console comes at a price. The Sonic the Hedgehog app in the Google Play app store costs only $2.99, a full $4.00 under the Ouya game version.

Having enough good games available for purchase is vital to a console’s success. Wii U sales remain slow because there isn’t enough content to play on the device. It takes time and enticements to get developers to build for your console. While there are many hundreds of titles for the Xbox 360 and Playstation 3, the boxes have been on the market for nearly eight years.

The Holy Grail is when console companies convince developers to create exclusively for their box. That has created some monster franchises, like Halo on the Xbox 360.

The Ouya launched with under 200 games. That number, which is displayed and updated daily on the www.ouya.tv website, is now up to 256. Uhrman said she’s confident gamers will coalesce around the open-development environment Ouya is incubating. She acknowledged the Ouya console and some games have bugs, but constant updates and immediate feedback from customers are smoothing out rough edges.

“What we’re doing is hard. Building a game ecosystem is hard. We’re the leaders in this space. The audience is helping us get better because of loyalty for the product we’re building. We have a strong community and a brand that’s getting better every day,” Uhrman said.

Uhrman said the Ouya isn’t about supplanting other consoles. She says her company is trying to do something different, building what she calls a “two-sided” market, where developers are guided by what consumers say they want, and vice-versa, as opposed to the more-closed world of big-console game development.

But the Ouya is, in many ways, competing for both time and TV table space with other consoles. Next-generation consoles are offering themselves up as more than just a gaming box. Microsoft, for example, wants to position its forthcoming Xbox One as a living-room entertainment hub, one that will allow you to stream movies, surf the Web, Skype and do other online things.

You can surf the Internet on the Ouya’s browser, but noticeably absent from the Ouya are Hulu and Netflix apps that would let users stream video through their TVs. Uhrman said the Ouya’s guts — featuring an NVidia Tegra 3 Quad-Core processor — are absolutely powerful enough to stream video already, and promised Hulu and Netflix interfaces, along with other interesting apps, are soon to come.

Besides the $8.6 million Ouya raised via Kickstarter last year, the company earlier this year announced it had secured $15 million in additional financing from venture-capital firms, including Kleiner Perkins Caufield & Byers, NVidia, Shasta Ventures, Occam Partners and the Mayfield Fund.

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